EP212: From Debt to Financial Freedom: Practical Advice with Connor Tyson

Brad. Thank you for having me on.

A little background on myself. So I have a degree in finance. I was a financial advisor for 25 years, chartered financial consultant. Now I'm a full-time personal financial coach for small business owners and individuals, married, two kids, love the outdoors. And that's who I am really. Like I'm, what you see is what you get. I'm pretty transparent. And yeah. It's all about me. You're from, you're

If you can't tell by the accent, yeah, we'll get a cup of coffee after this, but yeah.

So you bring up a good point, right? So most people started business to try to enrich them, their own lives, those around them, the people they love, right? And then if they don't have a process, if you will, on the personal side of things, they'll find out there's always a hole in the boat. They'll be constantly chasing revenue and clients and trying to get. to live up to that standard of what their burn rate is on the personal side. And they'll be scratching their head like there's something wrong. And they'll focus on the business. And that's growing, turning into a cash-eating monster to feed the personal side of what's going on.

Two things. One is the lifestyle creep. As they make more money, they spend more money. And then the other thing is not having what I call a Hills and Valley account, right? So a Hills and Valley account is another way of saying like an emergency fund, but it's not really an emergency fund. It's really a seasonal account where, okay, I'm making good money. Let's live below our means and put some money aside for those valleys. that are going to come up. Winter, if you're a landscaper, it's not that, right? So having those things, so when those valleys happen, because it's their first time in business, they don't know the seasonality or the revenue stream of their business, they're not prepared for that. And then when they go in the valley, they don't have anything and they put everything on debt. And then the season starts up again and the first two months of that is to pay off the debt they had during that valley. And then again, that cycle, and it's a crazy way to do things.

of the cashflow to make the cashflow predictable.

Yeah. So with a business, like the four major things I talk about with small business owners, operating expenses, you want to be a lean, mean fighting machine on that. Taxes, you got to pay your quarterly estimated taxes. Salary or owner's compensation, you got to pay yourself to live off the standard of living you want. Right. And then profit. You're in business to make a profit. Right. So that owner's compensation piece, that's a big chunk of it sometimes where you're paying yourself and it's hitting your personal checking account. If you got to manage that better. You would actually be able to weather a lot more storms in the future on the business side. It would level things out. You'd have less stress.

Like three to six, right? It depends on the revenue of your business, but as you're starting out, you want to put at least, yeah, three months of operating expenses aside. And then grow that. That's not just the finish line. You want to grow that. And then you can have an expansion account, which I call, or you want to grow the business, right? Some people have the tendency to dip into that, thinking that that's a good idea. No, set up a separate account for expansion, equipment, and all that other stuff.

Oh yeah, three to six months of your core expenses. So what are the core expenses? Housing, food, utilities, medicine, and transportation. Those five things, multiply them by three to six months. If you're a single income household, you want to have six months. If you have two people working, right? Three months.

Don't buy the truck. Because we're talking gas and car payment. And yeah, if you have a car payment, you want to get that out of your life as fast as possible.

the mentality. I always say create a good defense before an offense. I like that. Right. So what is it like defense wins championships? Right. So it's the boring stuff that. you don't want to do right now, like emergency funds, sinking funds for goals that you have, paying off debt, lowering the expenses on the personal side. And then once you have that solidified, sure, as you make more money, now you can start going after those aspirations of things you want. It's delaying the instant gratification of I deserve this for just a season of time. And people think it's forever. It's literally less than a year. If you actually focus on one thing at a time and prioritize, where do I start? What do I need to do to get this? And you check these things off your list, you're doing better than 90% of everybody around you. And then when things do happen, there's no stress. You have it. Like you've heard, when's the best time to rebuild your roof? When it's sunny out, not when it's raining. So same idea. When things are good. It's sunny out. Business is doing good. Make sure that you're taking care of your personal side and solidifying the what-ifs, the defense.

Not a fan. Not a fan. No, I wouldn't say I was a fan, no. He's not a financial coach. It's kind of like my way or the highway. where everybody's situation's unique. And I believe you have the answers inside of you. It's just to ask the right questions to find out what it is you really need to do for yourself. He has good financial principles that are solid, but I think his approach is a little good. Yeah.

habits and behaviors, behaviors.

Yeah, I see debt as a tool, right? It's a financial tool. That's what it is. You can actually use it to your advantage if you have the financial discipline, right? I use credit cards. I have loans, right? Not a bad thing. I just pay them off with cash. So I use them as a leverage tool to run money for 26 days, right? Then pay it off in full as I go along. You get in trouble when you don't have the habits and behaviors, the intentionality. You're reactive versus proactive, right? That's when you get yourself in a jam in that most of your audience know what to do. If I asked any blue collar worker, how do you become financially successful and wealthy? They'll rattle off, spend less than I make, avoid debt that doesn't make much sense and I can't afford it. Give, save. for the future, give to others around me and be generous with what I have, right? They know this. It's not the what, right? It's more the why and the how, the habits and behaviors. It's human nature to avoid those things you don't understand. And even with running a business, right? You have a great... passion of an idea, products and services like, great, now go run a business. It's two totally different games. And no one has really taught you how to manage money on your personal side. And the habits and behaviors is really what it's about. It's the accountability and follow through of, you know what to do, prioritize what you need to do and make sure you do it.

It's the habits and behaviors. It's the mindset. It's the instant gratification. It's the lack of communication and clarity of what's in it for me if I do this? What's in it for me if I don't do this? Right? The clarity of, okay, I need a new truck. What's the consequences of getting that new truck now? Not today, but six months from now. Right? Or can I afford this? I'm okay with you using debt if you have the cash flow to pay that debt. Wealthy people have assets that produce income to pay for things. They don't buy Ferraris with cash. They have an asset that kicks off enough income to pay the lease payment. And then, yeah, that's how wealthy people work. They are not using cash for things. They're leveraging their dollars through debt instruments. And they definitely have the money or the cash flow to pay those things off, even if they're called upon them.

Okay. So you got to get awareness and clarity of where you stand today. What does that mean?

Clarity is understanding where your money's going today. Okay. Right. So you just list out your expenses. Here's your income minus your expenses. You start with the necessities, those emergency fund necessities, the housing, the food, or everything like that. Then you go to the variable things and you prioritize those. Is Hulu and Netflix more important than some other variable expense? Okay. Then you can see where you either run out of money or where what's left over. If you run out of money, you have to go through what I call a cash flow triage. You have to make hard decisions together if you're married as to what it is you truly want and need. Okay. If you have money left over, as Dave Ramsey says, you got to give it a job. You have to tell that money where to go based upon your goals. That's where the clarity piece comes in. You have to prioritize all these things that are floating in the back of your head. Get them out on a piece of paper. We have an emergency fund. We got to pay off debt. We got two kids summer camp. We have college coming up. We have retirement. We have, right? Just write all these things out. And then look at the importance and the urgency of each one of those and focus on one thing at a time. And that's clarity. What does success look like? Those things. And then once you're there, you have to start gaining control of your money. You'll realize really quickly that I don't have the tools and resources, the habits and behaviors that align with what success looks like.

It's different for everyone.

definition of success, being able to buy the things you want to do when you want them, right? People that have money have freedom and choice. If you don't have money, you don't have much freedom or choice of what you need to do when you want to do it. So that's my definition of success.

Correct. Yep. And then what's the opportunity cost of that priority list? If you're putting a thousand dollars for Z now, what on this list is not getting addressed, right? So if you can eat out, it's important to bring the family together, right? Community, all that stuff. Great. Maybe you can bring it down to $500 and put $500 towards paying off debt or the college fund.

I've seen it happen. I've seen it happen.

You have to make that whole process a habit. Okay. You have to make that a behavioral thing where you have just regular, like 15 minutes, stand up check-ins. Like how are we doing with, did you call the home and auto insurance person? Did we, can we reduce that premium? Yeah. I got to call them next Wednesday. Great. Celebrate the successes. Keep the motivation going. Cause this is like a journey. This is not like wave the wand. You're good in year. So you want to transform your relationship with money on the personal side, and you just make it part of what you need to do. I imagine if you went through the Ramsey thing, you have that monthly budget meeting, the family budget meeting, and you talk about things that are coming up. Proactive also means look in the future. What's coming down the train tracks that you know are like right now, I'm talking about summer camp. I have two kids. It's summer camp. It's a big ticket item where we are, right? And it's like, okay. What are we doing to have the cash to pay this? Are we going to put on a credit card? Absolutely. But we'll have the cash to pay it off. Right. What are we doing? What do you suggest we do? Right. And I was like, okay, I can work overtime. I can do this. We can reduce that. And that way you're working as a team. And there's no more money fights. You're on the same page as to what you're doing, why you're doing it, and celebrating the successes as you're going along.

Absolutely. We have the big, we know the things that are happening every year. Like every year we want to have a family vacation. We do it every July, right? That's something that's on our calendar and we start proactively saving for every single year. It's a sinking fund, which is just basically, you know, the price and you start chipping away at that on a monthly basis or that we do a paycheck to paycheck on, we get paid biweekly. So every biweekly, Frequency, we take $80, $100, whatever the price is. out of the paycheck and put it into a saving account earmarked for those things.

Yep. Perfect example of the Christmas party.

Christmas, but I'm saving for my. Business is Christmas party now. It's part of the whole thing. And then I'm like on my personal side, yeah, I want to be able to give my kids and my family the gifts I want and how much we decided together how much we're going to spend on Christmas, on gifts. Right. We went back and forth on that one, but yeah, it's a, it's, you know, it's four, it's a four digit number. And I'm like, okay. This is what, this is what it's going to take to do that.

And then paying it off in March. And then you get, you're waiting on the tax refund. If you get one to pay it all off. Yeah. To your point is the behaviors. It's not a math problem. We know. how much it costs, what is coming, when it's coming. The curve ball I got was a wedding. I just got invited to a wedding. I got two months. I'm like, Oh, okay. I'm happy for them. Great. Right. I got to come up with like 300 bucks. And I'm like, all right, let's, let's, uh, let's put some money aside. We thought we were going to do this, but let's put some money aside for that.

And yeah, it happens. It's like, yeah.

These are all things that come up.

I've been guilty of it. In the beginning of my financial journey, when I was in debt, I was 23 years old. I looked down, I was like, oh my God, I had to say no to the things I had to say no to. And yes, the things I had to say is one of those things was in the summertime, they used to go out to Long Island and spend the weekend. It was like a $600 weekend. I had to have enough clarity and gumption to know this is something I need to say no to to get my financial house in order and how to articulate that to people. At the end of the day, no one really cared. I took it on as guilt, shame, remorse around it, embarrassment. What I found is most people are very self-centered and they really care about themselves more. then whatever it is that you're doing until it's like whatever. But as I started doing those things and not denying myself those things, but like aligning what success looked like for me with my actions, I started building momentum and it got easier and easier and easier because I started getting the fruits of what that was. And then I looked back and yeah, it made a huge, huge difference. Clarity, that's part of that clarity piece.

Correct. It's not sustainable though.

I mean, in my experience, life happens fast. Like we just talked about the wedding, right? Like you graduate high school. You may go into college. You may not. You work. You get engaged. You have a baby. You start looking for a house, two car payments, credit cards, the oil bill, summer camp, clothes for the kids, sports. You look up and you're like, oh, my God, and you're 34,35. And you realize like, whoa, this is getting, I'm fighting every other Wednesday with my spouse here. This is not what I pictured. And I call it hit the restart button. Like you said, the six to 12 months, like I coach people for a minimum of three months because it's transformation. You have to transform the way in which you are dealing with money and finances. Everything from communication, being able to tell the kids no, setting boundaries. getting proactive versus reactive, getting some small successes, and then building on that, the accountability and follow through to stay on that path. It's a game changer.

I don't tell people what to do with their money. Like, that's the other thing. Like, I don't tell people what to do with their money. It's about what you decide and how, what that means for you. So, like, I help people become, like, smart consumers. S-M-A-R-T. You might have heard this. So, S is self-aware. Why am I buying it? What is my motivation? Right? Am I angry, sad, feel inferior? You know, guilty pleasure. A, affordability. Can I actually afford this? The 30 bucks. If I put the 30 bucks towards this, I can't put 30 bucks towards Starbucks. And if I do, I run out of money and I know the consequence of that. R, research. Do my research, right? Is this the right vendor? Is this the right price? Can I get it somewhere cheaper, right? T is the time or opportunity cost of those decisions. Today, it's a $30 gift. Tomorrow, it might be a $3,000 patio set. If you do this, What is it that you're giving up in lieu of that? It might be the $3,000 IRA contribution. It might be the family vacation, again, that you missed. It could be an emergency fund. It could be a lot of different things. Oh, the boiler just went. I don't have the $1,200 for it because I spent it on that. It's just becoming more aware and conscious of your decisions and just pausing and asking yourself questions. I don't tell people, don't buy Starbucks. Let me take the only joy you have left in your life so you can save. 30 bucks a week. Okay. Well, if that's really, really important, you keep it. What else are you willing to do? It's easier to make more money also than cut expenses. Yeah.

So I just, I help people with, I say, I help them stop the eternal tug of war of their personal finances. That's what I do. Like there's a constant struggle of either paying Peter to pay Paul. or making decisions about, if I swipe this card, your lips start sweating because you're like, I don't know if this is going to actually go through. Who wants to live like that? And the reason why it's like that is because life happens fast and no one really sat down with you and said, listen, this is how it works. It's a proven thing as the habits and behaviors that go along with that.

This is the whole thing. They're why it has nothing to do with the numbers. Like I've worked with people that make a lot, a lot of CEOs of companies all the way down to single mothers of three. It's not a money thing. You have to get clarity on your why, why are you wanting to transform or change the financial picture? And it's not, I want to get out of debt. That's not the reason you're going to do this. Right. That's not really what you want. What you want is, what is it making you feel? What is it preventing you from doing? How long have you felt like this? Who else is dependent upon this change in your life? And the deeper you go with that, the more vivid you make that, the further you'll go along and the faster and the more drastic your change will be and the stick-to-itiveness to it. Because if you get that really vivid, you'll realize the consequences of not doing the things you should be doing for yourself. It's not up to me. It doesn't affect me at all or you, but it's affecting this person a lot. So would you say that that's where I first start?

If you're winging it every month, there's something wrong. Yeah. You shouldn't have to live by the seat of your pants to make decisions of groceries or gas.

Nope. It's the same as someone making $65,000 and the CEO making $650,000. It's the same thing. It's chopped off a zero. It's the same habits and behaviors. It's the same stuff. It's the clarity as to why they want to change, the principles and values they want, and then gaining control of that. Actually becoming, getting a coach or a financial consigliere to sit over your shoulder and say, okay, what is the most important thing? Just give them the advice and guidance. They don't tell them what to do. You don't tell the Don what to do. You just give counsel. Yeah. Right? And that's how it works. And over time, celebrate them the successes, and then they'll start seeing for themselves that it's working. There's nothing better than going on a family vacation with everybody and paying cash and not having to worry about it. Nothing. Like it's a beautiful thing paying for all your Christmas gifts in cash and you have nothing to worry about. You don't have to pay it off to the March. The car you talked about, right? It's great to have buying a storage unit, having enough income to be able to buy that truck. And then 10 years from later, I can sell the storage unit for more than what I paid for it and also sell the truck. It's a beautiful thing. You have more freedom and choice of what you do and your life changes. Like your family, you don't have to deny yourself those things you want to, you know.

A perfect example of that, I go salmon fishing up at the Great Lakes, right? That charter weekend. We buy a little bungalow. We go deep sea fishing. It's over $1,500. There was a time where I didn't have the cash flow to pay that. I had a newborn baby and all this other stuff. It was important to me. I didn't say I needed it. I said it was important to me because it was a weekend with my brother. And years later, the memories from that weekend were worth it. Did I pay for it? Yes. Looking back hindsight 2020? Yeah. I would have done the same things over and over again. It's not about denying those things that are important to you for other reasons outside of just, right? It was memories. It was family. It was, and back to the Christmas thing, it's not about the gifts. If you think about the best Christmases you had, it wasn't about the gifts. It was the people around the table, the laughs, the memories, the things that you take with your life. That's what, for me and my family, that's what that really matters, right? Absolutely. It's clarity around those things. And a lot of people are trying to build a car driving down the highway. trying to figure it out as they go along and it's not working out too well.

that car hard jacket,

About the Joneses, right? Like you've heard the grass is always greener on the other side. That guy takes care of his lawn, right? That's, that's what it comes down to. It's like those things that you focus and give attention to grow. be it good or bad, right? If you think negative, negative, negative, you attract negative. You think positive, positive, positive, right? If you focus on money and getting like intentional about it, things open up and opportunities arise. I don't know how that happens, but the grass is always greener on the other side because that guy takes care of his lawn.

And you guys are watering, right? Taking care of your financial backyard.

This is an area that causes a lot of trauma and difficulties in people's lives unnecessarily. I truly believe. that it's kind of like politics. They don't want to have a well-informed, engaged populace because if you actually knew what to do and had started doing it, they wouldn't have control over what it is that you do and you're being basically victim to the system, right? And you can hit the restart button. If you've had enough and you said, okay, I got to change what I'm doing, there are people out there that'll help you today. It doesn't, people think it's this huge mountain you have to climb over. It is not. It's tweaking a couple things in consistency of that that transforms family trees. It changes your whole life. And then you can help somebody else because you know what it takes. And that's what I want to preach. Like I want to be the loudspeaker of that. Like it's just, I've seen it all over the place. A lot of people suffer from it. And I just want to be that solution. Hence the name of my company, Progress Solutions. Like you're not making any progress. I can be the solution to that. Right. So that's what I want to just bestow on people. You have the ability to do this. It's just. You might not know how or have the habits and behaviors to do that or the tools and resources. And there's people out there that can help you.

My website is progress FC, like financial coaching, progress FC. com. There's a lot of tools and resources on there. Free. Everybody, all your listeners get a 45 minute consultation. They want to talk to their situation. Doesn't cost them a dime. Just looking to help people. I'm also on Instagram, Connor, the financial coach. You can be up on Facebook too. It's just Connor Tyson in New York. That's it.

So there's a book, I don't know if you see it in the background there. It's about the Oregon trail. It's on that table right there. So it's a book I'm reading called The Oregon Trail. And the reason I got it is there was people that expanded this country that actually took so much risk. None of them spoke the same languages. And somehow they expanded the United States and made a life of their own when they had nothing and they gained everything. And it's an amazing, amazing story. So I'm reading that. Business books right now. I don't know if it's a business book, but The Let Them. The Mel Robbins, let them. Oh

You're right. That's the hot topic nowadays. That's really about control. I'm a bit of a, I'm a parent of two. Right. So it's like constantly tell them what to do. They don't listen. And it's like, it gets frustrating. So let them. Yeah, I've read many, many books, but those are the two most recent ones.

Yeah, The Oregon Trail, The American Journey by Rinker, R-I-N-K-E-R, Buck, B-U-C-K. It's kind of a historical thing, but he actually went and reenacted him and his brother going on the Oregon Trail in an old wagon in the 19th century.

Yeah. And he was going through a really tough time in his life. Yeah. It's a, it's an awesome book. It's an awesome book. He was going through a divorce and he was just a mess. And he, he was like, you know what? He was always a history buff and he was out, uh, out in the Midwest and he came across a museum and it motivated him to be like, you know what? I'm going to do the Oregon trail. And he made this whole plan within a year. He was out there. On his own. Doing the work on trail.

Follow through. Awesome. And then he wrote a book about it. He's probably getting royalties and tons of money when he had nothing.